SEC OKs Marijuana Investing, PayPal Co-Founder Invests $75M

If investing all your savings in marijuana sounds like an idea that someone would come up with while intoxicated on said product in a slapstick comedy movie, think again. Investing in marijuana is no joke in 2015, and it has gained a major financial supporter that is changing the game.

After much debate over the course of 2014, the SEC decided in mid-December that it was not going to enforce federal laws against marijuana investing. Of course, having the U.S. Surgeon General state that marijuana can be helpful for health problems is helping marijuana gain ground as a solid financial investment that you can use for your nest egg.

In 2014, Forbes published multiple articles stating that the SEC would seize money invested in marijuana. The SEC also published a warning on their website against marijuana investing in May 2014 with regards to certain companies that were potential scammers. The particular companies the SEC focused on as scammers were FusionPharm, Cannabusiness Group, GrowLife, Advanced Cannabis Solutions, and Petrotech Oil and Gas. In addition, the SEC placed a general warning about any marijuana-related investing (whether they are scammers or not) and stated as follows.

“Risk of Prosecution for Marijuana-Related Companies: If you are considering investing in a company that is connected to the marijuana industry, be aware that marijuana-related companies may be at risk of federal, and perhaps state, criminal prosecution. The Department of Treasury recently issued guidance noting: “[T]he Controlled Substances Act (“CSA”) makes it illegal under federal law to manufacture, distribute, or dispense marijuana. Many states impose and enforce similar prohibitions. Notwithstanding the federal ban, as of the date of this guidance, 20 states and the District of Columbia have legalized certain marijuana-related activity.”

However, this all changed by the end of the year. The OC Register published an article on December 14, 2014 stating, “Irvine-based Terra Tech Corp. got approval last week from the Securities and Exchange Commission to use the $6.8 million it raised this year to build and run medical marijuana operations in Nevada.” In other words, the SEC is moving toward non-enforcement of laws related to investment in marijuana.

How did that mid-December acceptance of marijuana investments by the SEC pan out? In less than two months, headlines about marijuana hedge funds and investments have included PayPal’s co-founder, Peter Thiel. Fortune Magazine reported in early January that Theil’s firm had invested $75 million in Privateer Holdings. This marijuana investment is for production of prepackaged Marley Natural marijuana joints.

In late January, investors met in San Francisco to discuss marijuana investing. Leading the conversation was the ArcView Group. According to ArcView, Peter Thiel jumping on board with marijuana investing has rapidly changed that industry in just a few short weeks. About the move by Thiel, ArcView Group CEO, Troy Dayton, told The Weed Blog the following.

“Tech investors and entrepreneurs are realizing that the cannabis industry is the next frontier for the application of technology to create value. Up until now tech investors have sat on the sidelines, but that is changing very rapidly since Peter Theil’s Founder’s Fund jumped in.”

Backing that up is an interview about Peter Thiel’s move to invest in marijuana by The Washington Post. Taylor West, Deputy Director for the National Cannabis Industry Association, said that Thiel joining the marijuana investing industry with such a large amount of money, “sends a signal to the rest of the financial world that there are strong, smart opportunities out there.”

Mother Jones followed up on that conference with the ArcView Group in San Francisco and stated in February that Poseidon Asset Management “earned a 67 percent return in 2014, besting the S&P 500 by a factor of six.” Other facts about marijuana investing in the recent past were included in the ArcView annual report called, “The State of Legal Marijuana Markets.” One major highlight is that “legal cannabis sales will grow 32 percent in 2015 to $3.5 billion. By 2019, it predicts, sales will triple again.”